Market Pulse – Page 7 – Blue Bricks Magazine

Market Pulse

11 October 2021

Rental Prices in Rural Areas Soar During Pandemic

Rental prices have risen by 11% between the start of the pandemic and today, a new rental index report by Rightmove has found.

It brings the average cost of a rental in the UK to £1,041 per calendar month – compared to £940 in February 2020. In rural areas, which became far more sought-after during the pandemic for the additional space and distancing, the cost has risen by £123. In the less popular urban areas it’s gone up by far less at just £25 per month.

Demand for rural rentals well outstrips supply

The statistics also show there were 45% less rentals available in the suburbs and 61% fewer in rural areas since the start of the pandemic. In fact, 64% of all rental properties available were for urban areas (that was nearly half – 48% more – than pre-pandemic. Those available in the suburbs dropped 13% to 33%, while in rural areas the drop was from 6% to 3%.

The property portal based its analysis on more than 300,000 rental listings and stock for the period February 2020 and August 2021.

No ‘real change’ until next year say analysts

Analysts believe that with more people returning to work – at least in a hybrid fashion – that urban rental demand will increase again. But they say this isn’t going to happen overnight and, in fact, there may not be any major changes until next year.

A new report by Savills says they’re already noticed an upturn in city centre living, with Manchester and Birmingham, in particular, witnessing travel that is almost back to pre-pandemic levels. London, however, remains slow to change, with just 66% of travel returning (compared to figures in the high 80s and 90s for the two more northern cities.

A spokesman said “the office isn’t going to go away” and added: “Residents will still value additional space, but it is likely that they will also desire to be within reasonable commuting distance of city centres for the days they choose to work there.”

Mortgage rates for first time buyers falling

Meanwhile, buy to let landlords and first-time buyers, or those looking to remortgage will be interested to learn that mortgage interest rates are still falling. The rate for new mortgages in August, for instance, was 1.82% (a drop of 1 basis point since before the pandemic). For everyone else the rate remains at 2.05% and which, in itself, is a record low.

The low mortgage interest rate has helped propel the property market this year, despite soaring property costs. Mortgage approvals are still higher than before the pandemic, with lenders giving the go-ahead to 74,500 mortgages in August.

House prices up 8% over year

The average house may have fallen by £10,000 between June and July, figures for the Office for National Statistics show, but values have risen by 8% over the past year.

Upmarket estate agents Hamptons predict a ‘second wave of demand’ for house sales where house prices will increase to around 3.5% a year between 2022 and 2024.

Jill Stevenson

Market Pulse

24 September 2021

London Lagging Behind Property Sales in Northern Parts

Home owners in London are taking longer to sell than anywhere else in the UK, according to the latest Rightmove House Index.

It means those who are in two minds about selling right now would be better off waiting, says new research which forecasts a boost in house prices over the next decade.

But back to slow selling in the capital – owners there are waiting almost three months (58 days) to find a buyer. In Scotland it’s taking less than one month (24 days) and in the South West a month (33 days). In London it’s 10 days slower than the same period last year.

Average UK asking price up 5.8%

The average property price increase over 12 months in London is just 0.8%, bringing the cost to £638,285. In the UK as a whole the price rise is 5.8%, with the typical seller asking for £338,462.

Demand too is up – almost double the pre-pandemic figure. But more properties are coming to market now that summer is passed and the quieter season of autumn in settling in. This means prices may start to stabilise.

Sam Mitchell, of online estate agent Strike said: “The property market has proved its resilience yet again, with transactions climbing 32% in August.

“We’re witnessing another flurry of activity as buyers and sellers rush to complete before the final stamp duty savings are removed this month, with properties valued under £250,000 still benefiting from the relief. But the strength of the UK housing market goes well beyond fluctuations around changing tax policies, and we see little sign of it slowing down in the months to come despite the stamp duty holiday finally ending.”

Meanwhile, according to new research by Compare the Market, hold on to your home at the moment. Sell in a decade and make around one third of its current value, according to the study.

Using historic ONS data and future predictions, analysts say a property currently valued at £248,496 will probably be worth £286,107 in five years, by 2031 it’s market price will be around £323,718.

But, for prospective landlords, there is also the issue of rental yields. At the moment the north west has some of the highest. But the north east, Yorkshire and the Midlands aren’t too far behind in this regard either.

And, in terms of capital increases they are looking good too. Property prices in Yorkshire are expected to rise by 28.6% over the next decade. In the north east, they are expected to increase by 28.4%. The biggest rises, according to analysts, are expected to be in both the East and West Midlands property market, with an increase in property prices of 29% by 2031.

Age of first-time buyers increase

Not surprisingly, this ever-increasing rise in property prices will be matched with a corresponding rise in the age of first-time buyers, say the study. At the moment the average age across the UK is 33. In London it’s 35. That’s expected to go up to 34 and 37 respectively in 10 years’ time.

Compare those figures to 2006 when the average age in the UK for first-time buyers was 30 and 32 in the Capital.

Jill Stevenson

Digital Issues, Market Pulse, September - October 2021

9 September 2021

Market Pulse Round Up September/October 2021

Average rents increase by 6.6%

The latest report by the HomeLet Rental Index shows the average rent increased by 2.2% between June and July, with the figure now sitting at £1,029 pcm. That’s a record high and the second month in a row where the sum has exceeded £1,000 per month. It’s also a jump of 6.6% in a year. Zoopla’s Rental Market Report also shows it’s taking 16 days per property to rent out.

The biggest annual increases were in the southwest with annual growth of 12.9%. Next was Wales with a 11.8% rise, while the East Midlands was third with 10.8% rental growth. Rents in London had a 2.1% annual increase, bringing the average rent in the capital to a monthly £1,645.

The increase is down to demand far outstripping supply. The build-to-rent sector – offering upmarket amenities and concierge services – is now beginning to fill some of that need, but there remain large gaps in supply.

Buy-to-let landlords “growing in confidence”

The sector may have been hit by a raft of tough legislation in recent years, but the BTL market is still strong. And it’s going from strength to strength if a recent report by the National Residential Landlord Association’s quarterly Landlord Confidence Index is anything to go by.

This is backed up by a report commissioned by The Deposit Protection Service which found that 34% of existing UK landlords had – or were about to – increase their property portfolio. All said they were encouraged by recent price growth.

House sales fall by 62%

As predicted, following the end of the most generous Stamp Duty Holiday offering from the government at the end of June, house sales fell in July – and the slump was pretty big. Only 82,110 properties swapped owners in July, compared with 213,370 the previous month.

The figure, produced by HM Revenue and Customs in late August, shows a dip of 62% between June and July. The number of properties was still 1.8% higher than in July last year but, at the time, buyers, sellers and estate agents were still struggling with the lockdown demands of the pandemic.

Property analysts are predicting a rise in sales again in September – just in time for the end of the government’s current Stamp Duty tax-free saving on the first £250,000 of a property in England and Northern Ireland.

House prices begin to drop

Not only has the reduced Stamp Duty tax relief impacted on the number of sales, but it has also led to a drop in prices. In mid-August we saw house prices fall for the first time this year following the surge brought about by the pandemic. Rightmove’s latest house price index revealed the average property was valued at £1,000 less in August when compared with July, a drop of 0.3%, whilst Nationwide’s research demonstrated a 0.5% drop over the same period.

The biggest property value falls were, not surprisingly, in four-bedroom homes (the type of property that benefitted the most from the more general £500,000 Stamp Duty Tax break).

Despite fluctuations in house prices, historical data shows that prices will ultimately increase over time. Indeed, records by the Office for National Statistics show the value of the average house in the UK has grown by more than 20% over the past five years (from June 2016 to March 2021). Some analysts believe that by 2060 house prices will be double what they are today, meaning the average house will cost a pretty astonishing £422,723.

Current buying trends set to continue

But the market is expected to continue to tick over post-October and beyond, even without a Stamp Duty Holiday, as the impact of the pandemic forced many individuals to rethink their lifestyles. As Sarah Coles, property analyst at Hargreaves Lansdown, put it: “[The Stamp Duty Holiday] didn’t create demand from nowhere. There was already a crowd of people ready to buy because of changes in how we wanted to live, and pent-up demand from the closure of the market during the first lockdown. The tax break just opened a window … through which this crowd of people tried to squeeze.”

Meanwhile – and perhaps not surprisingly given current buying trends – a Zoopla analysis showed that of 15 locations where demand for property was falling, ten of these were in London. Looking at the period 5 April to 25 July, the analysis discovered that in the capital’s SW and E postcodes, demand fell by 26.5% compared with the previous four months.

Demand for property in areas such as Shoreditch and the City is poor, with many people continuing to work from home for the foreseeable future. In other areas of London there are problems with cladding – lenders aren’t willing to give mortgages unless buyers present an EWS1 external wall safety certificate.

But there is good news for luxury inner London homes in the likes of Mayfair and Knightsbridge, thanks to the return of international buyers looking for a second home in the capital.

Houses 8m2 smaller today than 40 years ago

An interesting report by ElectricalDirect in August showed how, despite soaring house prices over recent decades, the actual size (floor space) in property has shrunk. Where in 1980 you could count on having around 75m2 for instance, by last year you were looking at your average property measuring 67m2.

And while we’re getting less floor space for our money, the average cost of UK property has increased by a staggering 171% since 1980: back then you could expect to pay £18,377 for your own home, today it’s more likely to be around £247,898.

However, there are some parts of the country where house sizes have increased. In Cambridge, buyers have 10% more space to move around in compared with previous years in the city, but the downside is that they’ll pay for it. House prices there have increased by 57% since 2011. You’ll get more value for money in the seaside resort of Blackpool where house size has increased by 3% and prices are only expected to rise to an average of £138,680 by 2025.

A shift in commercial property preferences post-pandemic

Commercial property investors and landlords are repositioning their portfolios by selling up retail and office space and opting for student campuses and warehousing instead. That’s because, in 2010, retail outlets and offices made up 70% of commercial property sales. Today it’s only around 35%, according to Real Capital Analytics.

Global investment firm Blackstone is just one of many companies who have gone down this route in recent months, having seen how the pandemic has altered the commercial and residential property outlook. In commercial property terms, it’s all about students – both in relation to accommodation and research and development facilities (ie: high-tech life sciences campuses). Warehouses are also faring well with the increase in logistics companies.

The “golden triangle”: Oxford, Cambridge and London

Earlier this year a 40% stake in Magdalen College’s Oxford Science Park was offered at £100 million – more than five times what the college paid just five years previous. The “sweet spot”, according to investors in the “golden triangle” between Oxford, Cambridge and London. Around £2.4bn was invested in life sciences property there last year and there’s still room for growth, say analysts. Most big investors want to get in from the off though, saying the big money is in building new campuses and labs.

Warehouse shares up 16% post-pandemic

An increase in online shopping – particularly during the pandemic – has led to a huge demand for warehouse space by distribution companies. The shares of warehouse developer Segro went up 16% recently. Office supplier British Land and Land Securities have lost around 30% of their share price since the pandemic, whilst shares for shopping centre supremo Hammerson are down by 75%.

Guest Writer

August 2020, General, Market Pulse

26 August 2021

Fewer Property Sales and City Rental Prices Down

As predicted, house sales fell in July – in line with the end of the most generous government Stamp Duty Holiday offering.

And the slump was pretty big. Only 82,110 properties swapped owners in July, compared to 213,370 the previous month.

The figure, produced by HM Revenue and Customs this week, shows a dip of 62%. It was 1.8% higher than in July last year but then, at the time, buyers, sellers and estate agents were still struggling with the lockdown demands of the pandemic.

Stamp Duty holiday like ‘opening a window’

But the market is still expected to continue to tick over post-October and beyond in the absence of the Stamp Duty Holiday – thanks to the pandemic effect forcing many individuals to rethink their lifestyles. As Sarah Coles, property analysts at Hargreaves Lansdown, so succinctly put it:

[The Stamp Duty Holiday] didn’t create demand from nowhere. There was already a crowd of people ready to buy because of changes in how we wanted to live, and pent-up demand from the closure of the market during the first lockdown. The tax break just opened a window … through which this crowd of people tried to squeeze.”

The London property rollercoaster

Meanwhile, a Zoople analysis showed that on 15 locations where demand for property was falling, 10 of these were in London. Looking at the period April 5 to July 25, it discovered that in the capital’s SW and E postcodes, demand fell by more than a quarter (26.5%) compared to the previous four months.

Demand for property in areas such as Shoreditch and the City is poor, with many people continuing to work from home for the foreseeable future.

In other areas of London there is problems with cladding – lenders aren’t willing to give mortgages unless buyers present an EWS1 external wall safety certificate.

But there is good news for luxury inner London homes in the likes of Mayfair and Knightsbridge, thanks to the return of international buyers looking for a second home in the capital.

North East has biggest drop in demand

In Newcastle upon Tyne and Cleveland and Teesside, demand fell by 18.7% and 18.5% respectively. However, some locations in the North East enjoyed a 15% rise to June so figures were normalising. And, although demand in Darlington fell 27.1%, it was still historically high – 53% above the average in the same period in 2019.

Cities suffering slump in rental prices

When it comes to lettings, rental prices are rising fastest in the north east and south west. Both due to demand and supplies issues. Outside London, tenants are now paying 3% more for a rental, bringing the average cost to £780 per month. Zoopla’s Rental Market Report also shows it’s taking 16 days per property to rent out.

In the capital rents have fallen by 9.9% year-on-year, making it one of more affordable times to move there. In Leeds monthly rental prices have fallen by 0.7%. In Manchester they’re down 1.1% in Manchester, while landlords in Edinburgh are receiving 3.2% less than in 2019.

Jill Stevenson

General, Market Pulse

7 August 2021

Momentum Slowing but House Prices Still Rising

The average property in the UK increased in value by £1000, last month – according to the most recent Halifax index.

It brings the cost of the average house to £261,221. That’s £18,500 more expensive that the same time last year. July was the first month prices have been regarded since the ‘less generous’ Stamp Duty Holiday in England and Northern Ireland saw the £500,000 free tax threshold reduce by 50% to £250,000. In October it will revert to the usual £125,000 figure.

Annual house price rate falls for 2021

According to the High Street lender, the rate of increase for house prices last month was 0.4%, which was less of an increase than in July 2020. This means the annual house price increase for 2021 has fallen to 7.4%.

Russell Galley, Halifax’s managing director said he expected buyer activity to cool over the coming months, resulting in a steadier paced housing market by the end of the year. Despite this, fewer houses available compared to demand combined with continuing low interest rates means prices shouldn’t be falling any time soon – if at all.

Nicky Stevenson, managing director at the estate agents Fine & Country, said the Halifax figures showed that “the era of ballooning house prices is not over yet, even if a little air is now slowly starting to hiss out of the market.”

Greater mortgage availability and government schemes to help fund deposits were also helping to inflate prices. She added: “While annual growth has softened slightly since the frenzied heyday of the stamp duty holiday, there is still a great wall of money coming into the market despite the phasing out of this much celebrated tax break.”

This ‘great wall of money’ from affluent house owners who already have impressive amounts of equity in their existing homes, means many second steppers as well as first time buyers can’t afford to move home – certainly not at the present time.

In fact, the price difference between a two-bedroom flat and three-bedroom house has doubled over the past decade. According to Zoopla’s figures the difference is £78,000, compared with £39,000 in 2010.

North – South property divide widens

And, as people move towards greener spaces and bigger properties, the North and South divide continues to grow. Most popular destinations to move to judging by the rise in house prices from the Halifax survey, are the north-west and Yorkshire & Humberside. Wales also saw a large jump in house prices, with as much as 13.8%. London and the south-east, as well as the east of England witnessed far smaller house price jumps. Property in the capital was the lowest increase at just 2.5%.

House prices up 20% over five years says analyst

Tom Bill, head of UK residential research at property agent Knight Frank expects prices to rise by as much as 20% over the next five years or so. This, he says, will be due to the fact more people will be working from home and looking for more space for their own office. He too sees continued migration to the countryside.

Jill Stevenson

General, Market Pulse

27 July 2021

A “Perfect Storm of Demand” for UK Property

June 2021 was the busiest ever month on record for the UK property market.

HMRC saw 213,120 property transactions over the entire 30 days. That is the busiest since April 2005 when the government body first started recorded sales.

The Stamp Duty Holiday helped boost the numbers in England and now although the biggest savings in stamp duty have passed, buyers can still save up to £2,500.

One senior analyst said June’s record reflected a “perfect storm of demand.” This, he said, was accelerated by “locked down buyers seeking more space.” The Stamp Duty holiday only exacerbated the situation.

Prices up 30% from previous peak

It’s not only the number of sales that are hitting records in the housing market. Prices too are peaking, with property 30% higher than the peak back in 2007, just before the markets crashed.

Zoopla recorded the average property price as £230,700 – an increase of 5.4% year on year. Meanwhile there were 25% fewer properties on the market for the first six months of this year compared to last.

Around 19 viewers for every property

As a result, NAEA Propertymark, which represents estate agents, reported that its members had approximately 19 viewings for every property on their books last month. Although this too will rebalance as the year continues, say the Association as the number of buyers declines in line with the ending of the Stamp Duty holiday in September.

In terms of cost, nearly half (40%) of properties were sold for more than the original asking price.

In Wales, property has risen by 8.4% over the past 12 months – that’s the highest growth in 16 years. In Northern Ireland it was even higher, with growth of 8.6%.

Regionally, prices increased most in the North West (an increase of 7.3%) and Yorkshire & the Humber (up 6.8%).

Places where property has gone up by £100,000

In terms of postcodes, there were locations were the price of a property had increased by more than £100,000 over the previous year. This is according to a survey commissioned by the Sunday Times.

It shows there are at least eight areas that qualify. These are – North Cornwall (ie Padstow and Polzeath), South Devon (Salcombe and Kingsbridge), East Suffolk, South Cornwall (eg Fowey), North Devon (Woolacombe and Croyde), Renfrewshire in Scotland (Kilmacolm) and North Somerset (Long Ashton near Bristol).

Inner London faring very poorly in comparison

Inner London as fared particularly badly over the past year. That’s for two reasons – the first being the absence of overseas buyers during the panic. The second reason is the desire to move to ‘greener pastures’ or ‘costal havens.’ Property in this luxury postcode market is actually 20% down on previous values, according to Savills. It’s believed the first reason will rebalance itself once airport restrictions on overseas visitors are lifted fully.

A Zoopla senior researcher said demand for houses was still far outstripping flats. She expected price increases for family-sized houses to continue over the coming months, peaking at 6% then falling to around 5% by December 2021.

Jill Stevenson

General, Market Pulse

19 July 2021

Biggest Monthly House Price Rise Since 2007

House prices grew by the biggest monthly margin in June since 2007, new figures show.

The Rightmove survey – which calculates on the basis of asking prices rather than actual selling price – reported a 0.7% jump between June 13 and July 10. This will have been accelerated by buying trying to benefit from the higher Stamp Duty holiday rate benefits. Since July 1 the tax-free figure now sits at £250 (rather than £500) until the end of September.

Asking prices ‘up’ 6.7% over last six months

The property asking price figure has actually increased by 6.7% within the past six months on the Rightmove portal. Government figures from the Office of National Statistics based on completed transactions, showed house prices had risen by 10% between May 2020 and the same period this year. That brought the cost of the average UK home to £255,000 (a jump of £23,000 within a year).

The most popular type of home has been terraced houses. In Wales, these rose in price by 15.2% and in England by 11.2%. Detached homes were the next most popular property in Wales and England, with price rises of 14% and 11% respectively.

North West property is biggest winner

Of course, the prices haven’t been across the board. Prices went up most in the North West (15%). London house valuations have suffered most, with the lowest annual increase of 5.2%). The main reason for this is the pandemic incentivizing more people to move to more rural areas.

But a shortage of supply is also to blame for escalating house prices, say the Royal Institution of Chartered Surveyors (RICS). And they think this will continue to send prices soaring upwards over the next 12 months.

As far as moving out of cities is concerned though, some of the biggest winners when it comes to house prices have been villages and small commuter towns outside the capital.

Property ‘earning’ more than the average annual salary

In Hastings, Sussex, for instance they have increased so much that 62% of properties there increased more than the average salary this year, according to property portal Zoopla. In the South West, nearly one third of all homes have risen in value more than the house owner earns in a year. In the South East the figure is 28%.

In fact, the Zoopla study shows that one fifth of property in the UK earns more than the average salary (of £30,500).

Mortgage rates become more competitive

As a result, mortgage interest rates have gone down recently. Two high street lenders – TSB and Halifax – are offering two-year fixed interest rate deals of less than 1%. These do however, come with big deposit demands of 40%.

Both 0.94% fixed rate deals have fees of just under £1000 and are only available for those looking to re-mortgage and those with equity have to pay higher rates.

Mortgage brokers admit the deals are good but that there are better ones on the table – especially those at higher rates but with no fee.

Jill Stevenson

General, Market Pulse

11 July 2021

Commercial Property Preferences Change Post-Pandemic

Commercial property investors and landlords are repositioning their portfolios by selling up retail and office space and opting for student campuses and warehousing instead.

Global investment firm Blackstone are just one of many companies who have gone down this route in recent months, seeing how the pandemic has altered the commercial and residential property outlook. In terms of the latter, city housing is being spurned in favour of villages and greener spaces or coastal retreats. In commercial property terms, it’s all about students – both in terms of accommodation and research & development facilities in particular (ie high-tech life sciences campuses). Warehouses are also faring well with the increase in logistics companies.

As one analyst put it, commercial property interests have switched from retail to “beds, meds and sheds” — residential housing, healthcare and life science property and warehouses.

That’s because, in 2010, retail outlets and offices made up 70% of commercial property sales. Today it’s only around 35%, according to Real Capital Analytics.

‘Golden triangle of Oxford, Cambridge and London’

Earlier this year a 40% stake in Magdalen College’s Oxford Science Park was offered at £100 million – more than five times what the College paid five years ago. The ‘sweet spot’ according to investors in the ‘golden triangle’ between Oxford, Cambridge and London. Around £2.4bn was invested in life sciences property there last year and there’s still room for growth say analysts. Most big investors want to get in from the off though, saying the big money is in building new campuses and labs.

Warehouse shares up 16% post-pandemic

An increase in online shopping – particular during the pandemic – has led to a huge demand for warehouse space by distribution companies. Warehouse developer Segro shares went up 16% recently. Office supplier British Land and Land Securities have lost around 30% of their share price since the pandemic, while shares for shopping centre supremo Hammerson are down by 75%.

Buy to let landlords ‘growing in confidence’

The sector may have been hit by a raft of tough legislation in recent years, but the buy to let market is still strong. And it’s going from strength to strength, if the last quarterly report by the National Residential Landlord Association’s quarterly Landlord Confidence Index is anything to go by.

This is backed up by a report commissioned by The Deposit Protection Service which found that more than one third (34%) of existing UK landlords had – or were about to – increase their property portfolio. All said they were encouraged by recent price growth.

House values increase 20% in five years

Records by the Office for National Statistics show the value of the average house in the UK has grown by more than 20% over the past five years (from June 2016 to March 2021). That’s from £212,887 to £256,405. In 1991, the average UK house value was just £57,000.

The rental market too is flourishing, with a 4% increase year on year in May this year, according to the Homelet Rental Index. That’s an average rent in the UK of £997 pcm.

Jill Stevenson

Digital Issues, July - August 2021, Market Pulse

5 July 2021

Mortgage approvals ‘up’ as market ploughs forward

As predicted, the number of mortgages increased in April as would-be buyers rushed to take advantage of the Stamp Duty Extension.

Figures from the Bank of England’s latest quarterly report show that mortgage approvals increased to 86,900 (from 83,400 in March) – that’s the first monthly increase in five months. In November 2020 lenders approved a huge 103,000 mortgages as buyers rushed to beat the original March deadline for the Stamp Duty Holiday. The current extension is due to end on 30 June when the tax-free sum will fall to £250,000.

The April mortgage figures are around 20,000 approvals higher than the pre-pandemic period in March and April 2020. Nothing is expected to change until the end of the year at least thanks to the better-than-expected economic recovery for the UK, together with continued low interest rates.

Average mortgage 12.3% higher

In terms of value, the average mortgage approval in April this year was for £232,400, which is a 12.3% increase on last April’s figure of £206,900. The Bank of England also reported that households continued to pay off overdrafts and credit card debt – although to a lesser degree than before, now that lockdown is easing and restaurants and shops reopening.

Homeowners are propelling the market

Data also shows that, for the first time, it’s people with equity who are propelling the market. There were 82% more second- and third-time buyers this time round than in the previous quarter in 2020. The mortgage completion figure for first-time buyers has risen by 31% over the same period. Banking industry group UK Finance said this reversed the pattern of the past decade which saw more first-time buyers with mortgage approvals.

The impetus has been the desire for property with more space and gardens – something that second- and third-time buyers could afford, thanks to the growth in value of their existing properties.

“The ongoing health crisis has brought with it a need for space during lockdowns which existing homeowners, supported by over a decade now of uninterrupted price growth increasing their housing equity stakes, have been well placed to respond to,” explained a spokesman for UK Finance.

South of England owners have most equity

The south of England – where house values have risen most in the UK over the past decade – had the highest number of home movers. In the southeast, the number of home-mover mortgages increased by 110% during the first quarter year-on-year. In East Anglia, the figure had increased by 91% and in London by 85%.

Around 60% of borrowers own at least half of their home, with 50% of homeowners in the southeast owning equity of £250,000. In London around 20% of homeowners have equity valued at in excess of £500,000.

Figures also show that homeowners have been intent on moving further afield too. This corresponds with the desire to move to bigger properties in greener areas. If the working-from-home trend continues, then property analysts believe there will be a “broadening out” of property values across the whole of the UK.

Jill Stevenson

Handing over the keys to the new owners of a home

Digital Issues, July - August 2021, Market Pulse

5 July 2021

Does government policy on housing still support the population’s aspirations?

**Paul Staley***, Director, at build-to-rent specialist, Wise Living*

In the Budget at the beginning of March, Chancellor Rishi Sunak announced a new scheme to help first-time buyers get on the property ladder with just a 5% deposit along with a further extension to the Stamp Duty Holiday. This may be good news for some, but it doesn’t necessarily help and support everybody looking for somewhere new to live.

Home ownership continues to be the focus of UK government policy on the current housing crisis whereas the private rental market received very little support or attention other than the odd bit of new legislation. Changes in people’s lifestyles and the soaring costs of property are having an impact on how people view house buying and renting and it suggests home ownership might no longer be the only solution out there for everyone.

So, does the government’s housing policy support the population’s housing aspirations?

Priced out of government support

There are two key factors that should influence the UK’s housing policy: what can people afford and what suits their lifestyles. So, let’s look at the cost to begin with.

The government’s new 5% mortgage deposit scheme and Stamp Duty reduction is designed to help more people get on the property ladder. However, one of the biggest consequences of these policies is the increase in property prices, making the possibility of home ownership even more difficult. The deposit and transactional costs of buying a property are only one part of the financial process for securing a mortgage; the biggest hurdle is affordability.

Take Cambridge as an example. According to the latest Rightmove stats1, the average cost of a home in the city is £515,741 – meaning many properties in the area are priced out of first-time buyers’ reach, irrespective of any government help or support.

Average salary growth continues to be outpaced by the housing market, too. According to the ONS, the median weekly wage for full-time workers in the UK rose by just 0.1% from 2019 to 2020, standing at £31,461 a year. That’s almost a tenth of the UK’s average house price2. This figure also depends on other factors including age and location with, as expected, London wages pulling the average up.

In a year where outgoings would have been massively reduced for many by lockdowns, research shows that two thirds of people in the UK saved just over £7,0003 last year. Based on all these figures, a first-time buyer in an area like Cambridge is looking at 3½ years to save even a 5% deposit on a property at the average price for the area. This means that if you’re only just starting to save, you’re very unlikely to be able to take advantage of the scheme before it ends in December 2022.

So, affordability is just one reason why more people are looking for quality rental homes, but lifestyle changes are playing a big part, too.

A generation and a pandemic are changing aspirations

The expectations and choices of millennials and Generation Z, and the impact of the pandemic, are going to have a massive influence on lifestyle in the years and decades to come. Owning a home was once considered to be an aspiration that everyone should have, but now many people don’t see it that way.

The exploration of things like technology and a more conscious and curious generation are leading to people wanting more flexible lives. One study4 found that nearly half of millennials plan to leave their jobs within two years of starting them, while less than a third plan to stay longer than five years. Car ownership is also falling among younger generations too5, putting greater emphasis on easy access to public transport and local amenities.

And generations like millennials and Generation Z want to travel and explore and are more likely to fit in jobs around their travel plans, pushing back careers and home ownership to later in life.

People don’t want things that tie them down and a fixed address certainly falls into that category. The government’s support to get people on the property ladder is aimed at people more likely to be between the ages of 20 and 35 – so where is the support for the rental market which is likely to be suited to the lifestyle of many people of this generation?

The pandemic has also had its role to play. Some businesses have now committed to flexible working with the likes of Nationwide saying that employees can work from anywhere long-term. They are not alone in that stance and millennials and Generation Z are likely to spot an opportunity to mix the flexible lifestyle they want with a job they want. With remote working, people no longer have to live near their place of work – they can live well and with more choice and freedom as to where and how they want to live.

So, considering both the changes in lifestyle and the rising cost of getting on the property ladder, the government needs to consider more support for the rental market. Even though price is a huge factor in why younger people maybe aren’t buying homes, we may now have moved past the point of what the term ‘generation rent’ once stood for to a generation that wants to rent to support their flexible lifestyle. The property market therefore needs to meet this demand and ensure there are enough quality rental properties available in the right areas to meet the changing needs of the next generations. We need more support from the government to make this happen.

For more information on Wise Living, visit [w] wiselivinghomes.co.uk

Guest Writer

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